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Employers are liable for the effects that homophobic abuse masquerading as banter has on workers, according to an Employment Tribunal ruling.

The Scottish ruling came just after a US case in which name calling was also penalised.

Three weeks ago, a Glasgow Employment Tribunal ruled against a firm in which an employee was called a "wee poof" and "a cream puff" and fired after just eight days of employment for being psychologically imbalanced. The man was awarded £118,000 in compensation.

Last week in the US a Californian court heard an appeal against disciplinary action taken against a pupil for saying "that's so gay".

In the US case a schoolgirl was being teased by classmates about the fact that she came from a Mormon family. When asked did she have 10 mothers, she said "that's so gay". She later told the court that she had meant "that's so stupid, that's so silly, that's so dumb".

The school involved gave the pupil, Rebekah Rice, an official warning, and a record was added to her file detailing the incident. Her parents have sued the school, seeking to have her record wiped clean, and the trial judge in the case has yet to make a verdict known.

Similar insults formed the backbone of a UK employment case in recent weeks. Jonah Ditton sold advertising space in the media and took a new job with entertainment listings company CP Publishing.

There Ditton was subjected to insults related to his being gay from his second day on the job. His manager Warren Paul made comments in an exaggeratedly camp voice and said, when Ditton turned up for work in a cream suit, that he "looked like a cream puff".

He tried to join in a discussion on sex but was told by Paul to "shut it, you wee poof" in an aggressive tone. That night Ditton was telephoned to be told that he was sacked because he was not psychologically balanced.

Ditton said that in the aftermath of the incident he had started drinking heavily and lived on benefits, having previously earned £80,000 a year, though he has since returned to work.

The Employment Tribunal awarded Ditton £10,000 for injury to his feelings, £76,937 for financial loss, £5,291 in interest payments and £26,081 compensation because the company failed to follow the procedures set down in law.

The total award was £118,309, believed to be the highest Employment Tribunal award in a case related to a person's sexuality.